The NZ Labour Party
supported by National introduced ‘User pays’ for tertiary education and from there
on its downhill, all the way to the bankruptcy court for thousands of NZ
tertiary students. This latest report from Inland Revenue says it all.

Student loan borrowers
seeking bankruptcy as millions in debts wiped due to insolvency

TALIA SHADWELL

Last updated 10:53, October
1 2016

NZ Union of Students' Associations president Linsey Higgins,
left, says graduates abroad are struggling with interest-laden loans to the
point of declaring bankruptcy.

Overseas graduates declaring them-selves penniless are
among the 483 debtors whose $18 million in students loans have been wiped by
bankruptcies.

Inland Revenue has revealed the latest figures as the
amount owed by student loan defaulters’ tips over the $1 billion mark.
The 10 biggest overseas debtors owe more than $300,000 each.

Some are dying in debt. Ministry of
Education figures show that, in the year to June 2015, $19m
of student loan debt was written off because of the death of the borrower. That
compared with $16m written off because of bankruptcy.

One Auckland-based accountancy website advises
graduates: "If you are living overseas, a New Zealand bankruptcy may
have no negative impact on you at all."

Soon, information-sharing powers between Australia and New
Zealand's tax departments will be boosted, after two student
loan-related arrests at the border this year, and as overall student debt
reaches $15b.

The students best mate...yeah right!

Tertiary Education Minister Steven Joyce says Inland Revenue
does not seek to bankrupt anyone solely because of their student debt.

But student leaders say the crackdown on defaulters
is treating bright young Kiwis seeking careers
overseas like "traitors".

It is not clear how many of the bankruptcies were overseas debtors
applying specifically to wipe their student loan
debt. IRD was not able to immediately provide
the breakdown.

The bankruptcy figures include people owing
creditors for other reasons, such as business failures.

She said the union received calls from one to two borrowers a
month seeking advice on bankruptcy.

"We know it's most often happening in circumstances where
there's a consistent inflexibility by IRD to work with the overseas borrower
and that has put them in a position where they have literally no other
options."

"This is making the OE become a lot harder . . .
Medical students used to graduate and work in British
hospitals under the NHS. They want to do that because they want more
experience and [access to] the facilities and technology.

"They would come back to New Zealand and pay most of
their debt. But now, the interest accumulates on the loans.

"I think it's treating people like traitors to
leave. This idea that if you leave New Zealand to go abroad, we're going to
punish you."

IRD said its debt recovery initiatives included
offering methods to make repayments from abroad easier, and installment
options. Legal action and arrests at the border were a "last resort".

Tertiary Education Minister Steven Joyce said on Friday:
"There is no evidence that significant numbers of people who have declared
bankruptcy have done so because of student loans. Most people who declare
bankruptcy do so because they owe money to a range of creditors and, as a
result, their student debt is also written off.

"Inland Revenue doesn't seek to bankrupt anyone solely
because of their student debt.

"Entering into bankruptcy is not a decision that should
be taken lightly. There are significant negative consequences, including the
effect on a person's credit rating, their ability to get a loan in the future,
their possessions being sold, needing approval to travel overseas and being
unable to be the director of a company."

Labour leader Andrew Little said he was
personally against interest on loans for graduates abroad, but
the party had not discussed policy on it.

"We do want people to get overseas experience and,
ideally, most of them will come back and bring back their skills they've
learned overseas."

STUDENTS' BAD DEBT

About a third of the more than $1b of student
loan debt in default has been racked up through
penalties. Overseas-based debtors were the biggest culprits, making
up just over $982m of the bad debt.

Latest IRD figures show that, of the 100,589
overseas and New Zealand-based debtors behind on their loans, $344.2m was made
up of penalties. The late payment penalty rate is currently 8.8 per
cent.